83 FR 34639 - Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend BX Rules at Chapter VII, Section 6 Related to Market Maker Quotations, Section 14 Related to Lead Market Maker Quotations and Section 15 Related to Directed Market Maker Quotations
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 140 (July 20, 2018)
Federal Register Volume 83, Issue 140 (July 20, 2018)
| Page Range | 34639-34645 | |
| FR Document | 2018-15502 |
[Federal Register Volume 83, Number 140 (Friday, July 20, 2018)] [Notices] [Pages 34639-34645] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-15502] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83642; File No. SR-BX-2018-029] Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend BX Rules at Chapter VII, Section 6 Related to Market Maker Quotations, Section 14 Related to Lead Market Maker Quotations and Section 15 Related to Directed Market Maker Quotations July 16, 2018. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on July 2, 2018, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend BX Rules at Chapter VII, Section 6 related to Market Maker quotations, Section 14 related to Lead Market Maker quotations and Section 15 related to Directed Market Maker quotations. The text of the proposed rule change is available on the Exchange's website at http://nasdaqbx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose BX proposes to amend the current rule text of Chapter VII, Section 6(d), Section 14 and Section 15 related to quoting obligations for Market Makers, Lead Market Makers and Directed Market Makers, to restructure the current rule to mirror rule text utilized on Nasdaq Phlx LLC.\3\ The Exchange does not propose to amend the current quoting obligations, rather the Exchange proposes to more clearly state the current quoting obligations utilizing the same format as Phlx Rule 1081(c). --------------------------------------------------------------------------- \3\ Phlx Rule 1081(c)(ii). --------------------------------------------------------------------------- Chapter VII, Section 6(d)(i) The Exchange proposes to amend Chapter VII, Section 6(d) to remove the word ``continuous'' from this first sentence in the rule. The Exchange is removing the word ``continuous'' because the Exchange notes that Market Makers quote a percentage of the day and therefore the word continuous may not accurately reflect the manner in which Market Makers quote on BX. The Exchange proposes to retitle Section 6(d) as ``Intra- day Quotes.'' The Exchange also proposes to replace references to ``continuous'' with ``intra-day'' within the Rulebook. The Exchange proposes to amend Chapter V, Section 3 to replace ``continuous quoting'' with ``intra-day quoting.'' The Exchange proposes to amend proposed Chapter VII, Section 14(f)(4) to replace ``continuous electronic quote obligation'' with ``intra-day electronic quote obligation.'' The Exchange proposes to amend proposed Chapter VII, Section 14(g) to replace ``continuous quotes'' with ``intra-day quotes.'' The Exchange proposes to amend Chapter VII, Section 15(iii)(d) to replace ``continuous electronic quote obligation'' with ``intra-day electronic quote obligation.'' The Exchange proposes to amend Chapter X, Section 7(c) to replace ``continuous quotes'' and ``continuous bids and offers'' with ``intra- day quotes'' and ``intra-day bids and offers.'' The Exchange proposes to amend Chapter VII, Section 6(d)(i) to delete the [[Page 34640]] first sentence of this paragraph, ``On a daily basis, a Market Maker must during regular market hours make markets consistent with the applicable quoting requirements specified in these rules, on a continuous basis in options in which the Market Maker is registered.'' The Exchange believes that a Market Maker's obligation to enter bids and offers for the options to which it is registered is currently noted in proposed Chapter VII, Section 6(d). The Exchange proposes to specifically detail a Market Maker's quoting obligations in the proposed rule text and therefore believes that this sentence is not necessary because the following sentences replaces this sentence with the exception of the intra-day aspect as described below. The Exchange proposes to add new rule text to Chapter VII, Section 6(d)(i). The first new sentence will provide ``A Market Maker must enter bids and offers for the options to which it is registered, except in an assigned options series listed intra-day \4\ on the Exchange.'' The Exchange believes this sentence is more specific than Section 6(d) because it accepts [sic] the intra-day quotes. Today, a Market Maker is not held to quote an intra-day add of a series because the options series was not available for trading the entire day. The Exchange is adding this exception to the rule text to make clear that Market Makers would not be responsible for quoting an intra-day addition. The Exchange believes that not counting intra-day adds of a series that were not available for the entire day of trading is consistent with the Act because the Market Maker would not have the opportunity to trade that particular options series for the entire trading day. The Exchange also proposes to note, ``On a daily basis, a Market Maker must make markets consistent with the applicable quoting requirements specified below.'' The Exchange proposes to note within the new rule text the specific quoting obligations for each type of Market Maker. --------------------------------------------------------------------------- \4\ An intra-day add of a series shall be defined, for purposes of this Phlx Rule 1081 [sic], as an option series that is added manually on the same day the series begins trading. --------------------------------------------------------------------------- The Exchange is also adding rule text to explain the interplay between the quoting obligations for BX Market Makers who may also qualify as a Lead Market Maker, pursuant to Chapter VII, Section 14 or Directed Market Maker pursuant to Chapter VII, Section 15. Specifically, the Exchange proposes to add, similar to Phlx Rules,\5\ ``An Options Participant will be required to meet each market making obligation separately. A Market Maker who is also the Lead Market Maker, pursuant to Chapter VII, Section 14, will be held to the Lead Market Maker obligations in options series in which the Lead Market Maker is assigned and will be held to Market Maker obligations in all other options series where assigned. A Market Maker who receives a Directed Order,\6\ as described in Chapter VII [sic], Section 10, shall be held to the standard of a Directed Market Maker, as described in Chapter VII, Section 15.'' The Exchange proposes to make clear that a BX Options Participant who is a Market Maker, Lead Market Maker and Directed Market Maker will have quoting obligations which may need to be separately met depending on the role. --------------------------------------------------------------------------- \5\ See Phlx Rule 1081(c). \6\ The term ``Directed Order'' means an order to buy or sell which has been directed, provided it is properly marked as such, to a particular market maker (``Directed Market Maker''). Directed Orders are handled within the System pursuant to Chapter VII [sic], Section 10. Directed Orders may be available only in certain options. See Chapter VII [sic], Section 1(e)(2). --------------------------------------------------------------------------- Chapter VII, Section 6(d)(i)(1) The Exchange proposes to remove the following sentence from Chapter VII, Section (d)(i)(1), ``To satisfy this requirement, a Market Maker must quote 60% of the trading day (as a percentage of the total number of minutes in such trading day) or such higher percentage as BX may announce in advance.'' The Exchange proposes to replace this language with language that more technically defines the quoting obligation. The Exchange proposes the following rule text: Market Makers, associated with the same Options Participant, are collectively required to provide two-sided quotations in 60% of the cumulative number of seconds, or such higher percentage as BX may announce in advance, for which that Options Participant's assigned options series are open for trading. Notwithstanding the foregoing, a Market Maker shall not be required to make two-sided markets pursuant to this Chapter VII, Section 6(d)(i)(1) in any Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater. The 60% requirement and the manner in which it is calculated is not being amended. The Exchange does not propose to amend the current quoting obligations, rather the Exchange proposes to more clearly state the current quoting obligations utilizing the same format as Phlx Rule 1081(c)(ii)(A). The Exchange notes the quoting obligations expressed as the cumulative number of seconds rather than 60% of the trading day. While the current rule indicates that the Exchange currently reviews quoting as a percentage of the total number of minutes, the two standards are otherwise equivalent. Adding ``associated with the same Options Participant'' to the first sentence also makes clear that the obligation is at the firm level and that all associated Market Makers will be counted in arriving at the calculation for quoting obligations. The Exchange also states, ``Notwithstanding the foregoing, a Market Maker shall not be required to make two-sided markets pursuant to this Chapter VII, Section 6(d)(i)(1) in any Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater.'' This exception exists today for BX and is simply being carried over into the new text from current Section 6(d)(i)(2). The definition of an adjusted option series is currently defined at Section 6(d)(i)(2) as an option series wherein one option contract in the series represents the delivery of other than 100 shares of underlying stock or Exchange-Traded Fund Shares. This definition is being relocated to 6(d)(i)(1)(a), similar to Phlx's structure and is defined as ``Adjusted Options Series'' throughout this rule. Chapter VII, Section 6(d)(i)(2) The Exchange proposes to add new rule text at Chapter VII, Section 6(d)(i)(2) which provides the method by which the Exchange will calculate the BX Market Maker quoting obligations. The Exchange proposes to state, that the Exchange will (i) take the total number of seconds the Options Participant disseminates quotes in each assigned options series, excluding Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater; and (ii) divide that time by the eligible total number of seconds each assigned option series is open for trading that day. Similar to Phlx Rule 1081(c)(ii)(D), the Exchange believes that the addition of this language will bring greater transparency to the manner in which the Exchange calculated the quoting obligation. The Exchange is not amending the manner in which the quoting obligation is calculated, rather the Exchange is simply adding to the current rule the exact manner in which the Exchange determines the quoting percentage. The Exchange proposes to add, ``Quoting is not required in every assigned options series.'' This sentence is not currently contained in the rule. The Exchange is not proposing to amend its current practice, rather the Exchange is clearly stating that quoting is not required in every assigned options series to make clear the current [[Page 34641]] obligation. Also, the Exchange proposes to state, ``Compliance with this requirement is determined by reviewing the aggregate of quoting in assigned options series for the Options Participant.'' This language is similar to the language currently being removed from Chapter VII, Section 6(d)(i)(1), ``This obligation will apply to all of a Market Maker's registered options collectively to all appointed issues, rather than on an option-by-option basis.'' The proposed new language simply conforms the text to Phlx's Rule 1081(c)(ii)(D). Chapter VII, Section 6(d)(i)(3) The Exchange proposes to also delete the following language from Chapter VII, Section 6(d)(i)(3), ``This obligation will apply to all of a Market Maker's registered options collectively to all appointed issues, rather than on an option-by-option basis. Compliance with this obligation will be determined on a monthly basis. However, determining compliance with the continuous quoting requirement on a monthly basis does not relieve a Market Maker of the obligation to provide continuous two-sided quotes on a daily basis, nor will it prohibit the Exchange from taking disciplinary action against a Market Maker for failing to meet the continuous quoting obligation each trading day.'' The Exchange proposes to replace this language with the following language proposed in Section 6(d)(i)(3), ``For purposes of the Exchange's surveillance of an Options Participant compliance with this rule, the Exchange may determine compliance on a monthly basis. The Exchange's monthly compliance evaluation of the quoting requirement does not relieve an Options Participant of the obligation to provide two-sided quotes on a daily basis, nor will it prohibit the Exchange from taking disciplinary action against an Options Participant for failing to meet the quoting obligation each trading day.'' The Exchange's amendment is not substantive, rather the amendment conforms the rule text to Phlx Rule 1081(c)(iii). The Exchange proposes to remove the entire paragraph at current Section 6(d)(i)(2). As explained above this language is being relocated within the proposed rule text to Section 6(d)(i)(1) and subsection (a) to that paragraph. The Exchange notes that the sentence ``Accordingly, the continuous quotation obligations set forth in this rule shall not apply to Market Makers respecting Quarterly Option Series, adjusted option series, and series with an expiration of nine months or greater'' is being deleted and not relocated because this sentence is redundant. Also, the Exchange proposes to amend current Section 6(d)(i)(3) by renumbering it (4) and also capitalizing ``System'' which is a defined term and renumbering a cross-reference. Chapter VII, Section 14(f) BX's Rules at Chapter VII, Section 14(f) related to Lead Market Maker or ``LMM'' quotations. The Exchange is amending BX's Rules to conform to Phlx's Rules with respect to Specialists which are the equivalent of an LMM on BX. Similar to the changes for BX Market Makers, the Exchange proposes to more specifically state within Section 14(f) that an LMM must enter two-sided quotations. Further, ``An LMM that enters a bid (offer) in a series of an option in which he is registered on BX must enter an offer (bid), except in an assigned options series listed intra-day \7\ on BX. These quotations must meet the legal quote width requirements specified in Chapter VII, Section 14(b)(iv), (v) and (vi).'' --------------------------------------------------------------------------- \7\ See note 4 above. --------------------------------------------------------------------------- The Exchange is removing the words ``may enter quotations only in the issues included in its appointment.'' The Exchange is revising this paragraph to state, ``An LMM must enter two-sided quotations. An LMM that enters a bid (offer) in a series of an option in which he is registered on BX must enter an offer (bid), except in an assigned options series listed intra-day on BX. These quotations must meet the legal quote width requirements specified in Chapter VII, Section 14(b)(iv), (v) and (vi). A Market Maker who is also the Lead Market Maker, pursuant to this Chapter VII, Section 14, will be held to the Lead Market Maker obligations in options series in which the Lead Market Maker is assigned and will be held to Market Maker obligations in all other options series where assigned pursuant to Chapter VII, Section 6(d).'' The deletion of the words from this paragraph are replaced with the same concept in the new sentences where it is stating that the LMM enter a bid (offer) in a series of an options in which he is registered on BX. Today, an LMM is not held to quote an intra-day add of a series because the options series was not available for trading the entire day. The Exchange is adding this exception to the rule text to make clear that LMMs would not be responsible for quoting an intra-day addition. The Exchange believes that not counting intra-day adds of a series that were not available for the entire day of trading is consistent with the Act because the LMM would not have the opportunity to trade that particular options series for the entire trading day. As is the case today, an LMM must meet the legal quote width requirements specified in Section 14(b)(iv), (v) and (vi). The Exchange also proposes to add to this paragraph the following sentence, ``A Market Maker who is also the Lead Market Maker, pursuant to this Chapter VII, Section 14, will be held to the Lead Market Maker obligations in options series in which the Lead Market Maker is assigned and will be held to Market Maker obligations in all other options series where assigned pursuant to Chapter VII, Section 6(d).'' This language will parallel the language currently proposed on Chapter VII, Section 6(d) and make clear that a BX Options Participant who is a Market Maker and a Lead Market Maker will have quoting obligations, which may need to be separately met depending on the role. Chapter VII, Section 14(f)(1) The Exchange proposes to remove the following sentence from Chapter VII, Section 14(f)(1), ``An LMM must provide continuous two-sided quotations throughout the trading day in its appointed issues for 90% of the time the Exchange is open for trading in each issue. Such quotations must meet the legal quote width requirements herein. These obligations will apply to all of the LMMs appointed issues collectively, rather than on an option-by-option basis. Compliance with this obligation will be determined on a monthly basis.'' The Exchange proposes to replace this language with language that more technically defines the quoting obligation. The Exchange proposes the following rule text: LMMs, associated with the same Options Participant, are collectively required to provide two-sided quotations in 90% of the cumulative number of seconds, or such higher percentage as BX may announce in advance, for which that Option Participant's assigned options series are open for trading. An LMM shall not be required to make two-sided markets in any Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater. However, a LMM may still receive a participation entitlement in such series if it elects to quote in such series and otherwise satisfies the requirements of Chapter VI, Section 10. The 90% requirement and the manner in which it is calculated is not being amended. The Exchange does not propose to amend the current quoting obligations, rather the Exchange proposes to more clearly state the current quoting obligations utilizing the same format as Phlx Rule 1081(c)(ii)(B). [[Page 34642]] The Exchange notes the quoting obligations expressed as the cumulative number of seconds rather than 90% of the trading day. The two standards are equivalent. The rule text in current Section 14(f)(1) is being revised and certain text is being relocated. The legal quote width obligations are now in Section 14(f) generally and the compliance obligations are being relocated to Section 14(f)(3) as described in more detail below. The rule text related to making a two-sided market in Quarterly Option Series, any adjusted option series, and any option series with an expiration of nine months or greater is being relocated from Section 14(f)(4) along with the definition for an Adjusted Option Series which is being relocated to Section 14(f)(1)(a) and is being defined. The Exchange is also relocating this sentence ``However, a LMM may still receive a participation entitlement in such series if it elects to quote in such series and otherwise satisfies the requirements of Chapter VI, Section 10'' from current Chapter VII, Section 14(f)(4). The Exchange is conforming the adjusted series definition to that of Phlx,\8\ which provides ``An adjusted option series is an option series wherein one option contract in the series represents the delivery of other than 100 shares of underlying stock or Exchange-Traded Fund Shares.'' \9\ The amendment of the definition will not result in an adjusted option series being treated differently for purposes of BX Rules. --------------------------------------------------------------------------- \8\ See Phlx Rule 1081(c)(ii)(A)(i). \9\ Chapter VII, Section 14(f)(4) provides the following definition for an adjusted options series, ``For purposes of this Rule, an adjusted option series is an option series wherein, as a result of a corporate action by the issuer of the underlying security, one option contract in the series represents the delivery of other than 100 shares of underlying security.'' --------------------------------------------------------------------------- Chapter VII, Section 14(f)(2) The Exchange proposes to add new rule text at Chapter VII, Section 14(f)(2) which provides the method by which the Exchange will calculate the BX LMM quoting obligations. The Exchange proposes to state, that the Exchange will (i) take the total number of seconds the Options Participant disseminates quotes in each assigned options series, excluding Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater for Market Makers; and (ii) divide that time by the eligible total number of seconds each assigned option series is open for trading that day. This language conforms to the language also proposed for Chapter VII, Section 6(d)(i)(2). Similar to Phlx, the Exchange believes that the addition of this language will bring greater transparency to the manner in which the Exchange calculated the quoting obligation. The Exchange proposes to add, ``Quoting is not required in every assigned options series.'' This sentence is not currently contained in the rule. The Exchange is not proposing to amend its current practice, rather the Exchange is clearly stating that quoting is not required in every assigned options series to make clear the current obligation. Also, the Exchange proposes to state, ``Compliance with this requirement is determined by reviewing the aggregate of quoting in assigned options series for the Options Participant.'' This language is similar to the language currently being removed from Chapter VII, Section 14(f)(1), ``These obligations will apply to all of the LMMs appointed issues collectively, rather than on an option-by-option basis.'' The proposed new language simply conforms the text to Phlx's Rule 1081(c)(ii)(D). Chapter VII, Section 14(f)(3) The Exchange proposes to relocate the following rule text from current Section 14(f)(1) to new (f)(3) ``BX Regulation may consider exceptions to the requirement to quote 90% (or higher) of the trading day based on demonstrated legal or regulatory requirements or other mitigating circumstances.'' The Exchange proposes to replace this rule text in current Section 14(f)(1), ``However, determining compliance with the continuous quoting requirement on a monthly basis does not relieve an LMM of the obligation to provide continuous two-sided quotes on a daily basis, nor will it prohibit the Exchange from taking disciplinary action against an LMM for failing to meet the continuous quoting obligation each trading day'' with the following rule text: For purposes of the Exchange's surveillance of an Options Participant compliance with this rule, the Exchange may determine compliance on a monthly basis. The Exchange's monthly compliance evaluation of the quoting requirement does not relieve an Options Participant of the obligation to provide two-sided quotes on a daily basis, nor will it prohibit the Exchange from taking disciplinary action against an Options Participant for failing to meet the quoting obligation each trading day. The Exchange is not amending the manner in which the surveillance functions today. The Exchange proposes to conform this rule text throughout the rule to mirror language utilized in Phlx Rule 1081(c)(iii) and also proposed new Chapter VII, Section 6(d)(i)(3). This rule text mirrors language currently contained in Section 14(f)(1). Chapter VII, Section 14(f)(2), (3) and (4) The Exchange proposes to renumber current Section 14(f)(1)(i) as Section 14(f)(4). As noted herein, current Section 14(f)(4) is being relocated to within the rule text as explained above. The Exchange also proposes to renumber Section 14(f)(2) and (3), which are not being amended, as 14(g) and (h), respectively. Chapter VII, Section 15(iii) The Exchange proposes to amend Section 15(iii) related to Directed Market Maker quoting requirements to similarly add text to conform to Phlx Rule 1081(c)(ii)(C). The Exchange proposes to add to Section 15(iii), ``A Directed Market Maker must enter two-sided quotations. A Directed Market Maker that enters a bid (offer) in a series of an option in which he is registered on BX must enter an offer (bid), except in an assigned options series listed intra-day on BX. These quotations must meet the legal quote width requirements specified in Chapter VII, Section 6(d)(ii).'' Similar to the changes for BX Market Makers and Lead Market Makers, the Exchange proposes to more specifically state within Section 15(iii) that an Directed Market Maker must enter two-sided quotations. Today, a Directed Market Maker is not held to quote an intra-day add of a series because the options series was not available for trading the entire day. The Exchange is adding this exception to the rule text to make clear that Directed Market Makers would not be responsible for quoting an intra-day addition. The Exchange believes that not counting intra-day adds of a series that were not available for the entire day of trading is consistent with the Act because the Directed Market Maker would not have the opportunity to trade that particular options series for the entire trading day. As is the case today, a Directed Market Maker must meet the legal quote width requirements specified in Chapter VII, Section 6(d)(ii). The Exchange also proposes to add to this paragraph the following sentence, ``A Market Maker who receives a Directed Order, as described in Chapter VII [sic], Section 10, shall be held to the standard of a Directed Market Maker as described in Chapter VII, Section 15.'' This language will make clear where a Market Maker receives a Directed Order and what the quoting standard shall be for that Directed Market Maker. [[Page 34643]] Chapter VII, Section 15(iii)(a) The Exchange proposes to adopt a new Section 15(iii)(a) and provide, Directed Market Makers, associated with the same Options Participant, are collectively required to provide two-sided quotations in 90% of the cumulative number of seconds, or such higher percentage as BX may announce in advance, for which that Options Participant's assigned options series are open for trading. An Options Participant shall be considered directed in all assigned options once the Options Participant receives a Directed Order in any option in which they are assigned and shall be considered a Directed Market Maker until such time as an Options Participant notifies the Exchange that they are no longer directed. Notwithstanding the foregoing, an Options Participant shall not be required to make two-sided markets in any Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater. Notwithstanding the obligations specified in subparagraph (iii) above, a DMM may still receive a participation entitlement in such series if it elects to quote in such series and otherwise satisfies the requirements of Chapter VII [sic], Section 10. The Exchange notes that it is not amending the quoting obligations for Directed Market Makers. The Exchange is simply conforming the text to Phlx Rule 1081(c)(ii)(C). The Exchange is adding rule text to make clear, similar to Phlx Rule 1081(c)(ii)(C), when a Directed Market [sic] is considered to be directed. Similar to Phlx, an Options Participant shall be considered directed in all assigned options once the Options Participant receives a Directed Order in any option in which they are assigned and shall be considered a Directed Market Maker until such time as an Options Participant notifies the Exchange that they are no longer directed. The Exchange, similar to today, shall not apply quoting obligations to Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater.\10\ The Exchange is relocating language to Section 15(iii)(a) from Section 15(iv) which states, ``a DMM may still receive a participation entitlement in such series if it elects to quote in any Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater series and otherwise satisfies the requirements of Chapter VII [sic], Section 10.'' --------------------------------------------------------------------------- \10\ See current Chapter VII, Section 15(iv). --------------------------------------------------------------------------- Chapter VII, Section 15(iii)(a)(i) The Exchange proposes to adopt a definition of an adjusted option series in subparagraph (i) similar to Phlx \11\ which provides ``An adjusted option series is an option series wherein one option contract in the series represents the delivery of other than 100 shares of underlying stock or Exchange-Traded Fund Shares,'' \12\ and define it. The amendment of the definition will not result in an adjusted option series being treated differently for purposes of BX Rules. --------------------------------------------------------------------------- \11\ See Phlx Rule 1081(c)(ii)(A)(i). \12\ Chapter VII, Section 15(iv) provides the following definition for an adjusted options series, ``For purposes of this Rule, an adjusted option series is an option series wherein, as a result of a corporate action by the issuer of the underlying security, one option contract in the series represents the delivery of other than 100 shares of underlying security.'' --------------------------------------------------------------------------- Chapter VII, Section 15(iii)(b) The Exchange proposes to add new rule text at Chapter VII, Section 15(iii)(b) which provides the method by which the Exchange will calculate the BX Directed Market Maker quoting obligations. The Exchange proposes to state, that the Exchange will (i) take the total number of seconds the Options Participant disseminates quotes in each assigned options series, excluding Quarterly Option Series, any Adjusted Option Series, and any option series with an expiration of nine months or greater; and (ii) divide that time by the eligible total number of seconds each assigned option series is open for trading that day. Similar to Phlx, the Exchange believes that the addition of this language will bring greater transparency to the manner in which the Exchange calculated the quoting obligation. The Exchange proposes to add, ``Quoting is not required in every assigned options series.'' This sentence is not currently contained in the rule. The Exchange is not proposing to amend its current practice, rather the Exchange is clearly stating that quoting is not required in every assigned options series to make clear the current obligation. Also, the Exchange proposes to state, ``Compliance with this requirement is determined by reviewing the aggregate of quoting in assigned options series for the Options Participant.'' This language is similar to the language currently being removed from Chapter VII, Section 15(iii) ``These obligations will apply collectively to all series in all of the issues, rather than on an issue-by-issue basis.'' The proposed new language simply conforms the text to Phlx's Rule 1081(c)(ii)(D). Chapter VII, Section 15(iii)(c) The Exchange proposes to relocate the following rule text from current Section 15(iii) to new 15(iii)(c) ``BX Regulation may consider exceptions to the requirement to quote 90% (or higher) of the trading day based on demonstrated legal or regulatory requirements or other mitigating circumstances.'' The Exchange proposes to add, For purposes of the Exchange's surveillance of an Options Participant compliance with this rule, the Exchange may determine compliance on a monthly basis. The Exchange's monthly compliance evaluation of the quoting requirement does not relieve an Options Participant of the obligation to provide two-sided quotes on a daily basis, nor will it prohibit the Exchange from taking disciplinary action against an Options Participant for failing to meet the quoting obligation each trading day. The Exchange is not amending the manner in which the surveillance functions today. The Exchange proposes to conform this rule text throughout the rule to mirror language utilized in Phlx Rule 1081(c)(iii). The Exchange proposes to relocate and revise this language, ``provide continuous two-sided quotations throughout the trading day in all options issues for which the Directed Market Maker is assigned for 90% of the time the Exchange is open for trading in each issue. Such quotations must meet the legal quote width requirements of Chapter VII, Section 6. These obligations will apply collectively to all series in all of the issues, rather than on an issue-by-issue basis. Compliance with this obligation will be determined on a monthly basis'' as described herein into Sections 15(iii) and Section 15(iii)(a). Chapter VII, Section 15(iii)(d) The rule text concerning a technical failure is being relocated from Section 15(iii) to Section 15(iii)(d). The word ``system'' is being capitalized as that term is defined within the Rulebook. As noted herein, Section 15(iv) is being relocated to Section 15(iii)(a) and Sections 15(iii)(a)(i). The Exchange believes this proposed rule will allow Market Makers to quickly compare obligations across Nasdaq affiliated markets.\13\ --------------------------------------------------------------------------- \13\ The Exchange intends to file a similar proposal for The Nasdaq Stock Market, LLC, Nasdaq ISE, LLC, Nasdaq GEMX, LLC and Nasdaq MRX, LLC. --------------------------------------------------------------------------- [[Page 34644]] 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\14\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\15\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. The Exchange believes that its proposed rule change provides further detail as to obligations of Market Makers, LMMs and Directed Market Makers on BX. The Exchange is not amending its current quoting obligations, rather the Exchange is proposing to amend its current rule text to bring greater transparency to the current quoting obligations by adding clear language which explains the manner in which BX will calculate the various quoting obligations for each type of Market Maker. The Exchange believes the proposed rule text is consistent with the Act because the proposed rule text protect investors and the public interest by providing clear language that will be utilized on all Nasdaq affiliate markets for easy comparison. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f(b). \15\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\16\ in general, and furthers the objectives of Section 6(b)(5) of the Act,\17\ in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest. The proposal does not impose a burden on competition because the Exchange will continue to uniformly calculate and apply the quoting obligations to all BX Market Makers as provided for in the proposed rule text. The Exchange's proposal does not modify the current quoting obligations on BX. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78f(b). \17\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act \18\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\19\ --------------------------------------------------------------------------- \18\ 15 U.S.C. 78s(b)(3)(A)(iii). \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. --------------------------------------------------------------------------- A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b-4(f)(6)(iii),\21\ the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. In its filing with the Commission, the Exchange has asked the Commission to waive the 30-day operative delay so that the proposal to amend its Market Maker quoting obligations to add more detail to the current quoting requirements may become operative immediately upon filing. The Exchange believes that the proposal will bring greater transparency to the Exchange's rules. The Commission notes that the changes are substantially similar to Phlx Rule 1081(c). As such, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. Therefore, the Commission designates the proposed rule change operative upon filing.\22\ --------------------------------------------------------------------------- \20\ 17 CFR 240.19b-4(f)(6). \21\ 17 CFR 240.19b-4(f)(6)(iii). \22\ For purposes only of waiving the operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) of the Act \23\ to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \23\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-BX-2018-029 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-BX-2018-029. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-BX-2018-029 and should be submitted on or before August 10, 2018. [[Page 34645]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\24\ --------------------------------------------------------------------------- \24\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-15502 Filed 7-19-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 34639
it appears to the Commission that such For the Commission, by the Division of proposed rule change. The text of these
action is necessary or appropriate in the Trading and Markets, pursuant to delegated statements may be examined at the
public interest, for the protection of authority.11 places specified in Item IV below. The
investors, or otherwise in furtherance of Eduardo A. Aleman, Exchange has prepared summaries, set
the purposes of the Act. Assistant Secretary. forth in sections A, B, and C below, of
IV. Solicitation of Comments [FR Doc. 2018–15497 Filed 7–19–18; 8:45 am] the most significant aspects of such
BILLING CODE 8011–01–P statements.
Interested persons are invited to
submit written data, views, and A. Self-Regulatory Organization’s
arguments concerning the foregoing, SECURITIES AND EXCHANGE Statement of the Purpose of, and
including whether the proposed rule COMMISSION Statutory Basis for, the Proposed Rule
change is consistent with the Act. Change
Comments may be submitted by any of [Release No. 34–83642; File No. SR–BX–
2018–029] 1. Purpose
the following methods:
BX proposes to amend the current
Electronic Comments Self-Regulatory Organizations; Nasdaq rule text of Chapter VII, Section 6(d),
• Use the Commission’s internet BX, Inc.; Notice of Filing and Section 14 and Section 15 related to
comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed quoting obligations for Market Makers,
rules/sro.shtml); or Rule Change To Amend BX Rules at Lead Market Makers and Directed
• Send an email to rule-comments@ Chapter VII, Section 6 Related to Market Makers, to restructure the
sec.gov. Please include File Number SR– Market Maker Quotations, Section 14 current rule to mirror rule text utilized
CboeBYX–2018–011 on the subject line. Related to Lead Market Maker on Nasdaq Phlx LLC.3 The Exchange
Quotations and Section 15 Related to does not propose to amend the current
Paper Comments Directed Market Maker Quotations quoting obligations, rather the Exchange
• Send paper comments in triplicate proposes to more clearly state the
July 16, 2018.
to Secretary, Securities and Exchange current quoting obligations utilizing the
Commission, 100 F Street NE, Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 same format as Phlx Rule 1081(c).
Washington, DC 20549–1090.
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Chapter VII, Section 6(d)(i)
All submissions should refer to File
notice is hereby given that on July 2,
Number SR–CboeBYX–2018–011. This The Exchange proposes to amend
2018, Nasdaq BX, Inc. (‘‘BX’’ or
file number should be included on the Chapter VII, Section 6(d) to remove the
‘‘Exchange’’) filed with the Securities
subject line if email is used. To help the word ‘‘continuous’’ from this first
and Exchange Commission (‘‘SEC’’ or
Commission process and review your sentence in the rule. The Exchange is
‘‘Commission’’) the proposed rule
comments more efficiently, please use removing the word ‘‘continuous’’
change as described in Items I and II
only one method. The Commission will because the Exchange notes that Market
below, which Items have been prepared
post all comments on the Commission’s Makers quote a percentage of the day
by the Exchange. The Commission is
internet website (http://www.sec.gov/ and therefore the word continuous may
publishing this notice to solicit
rules/sro.shtml). Copies of the not accurately reflect the manner in
comments on the proposed rule change
submission, all subsequent which Market Makers quote on BX. The
from interested persons.
amendments, all written statements Exchange proposes to retitle Section
with respect to the proposed rule I. Self-Regulatory Organization’s 6(d) as ‘‘Intra-day Quotes.’’
change that are filed with the Statement of the Terms of Substance of The Exchange also proposes to
Commission, and all written the Proposed Rule Change replace references to ‘‘continuous’’ with
communications relating to the The Exchange proposes to amend BX ‘‘intra-day’’ within the Rulebook. The
proposed rule change between the Rules at Chapter VII, Section 6 related Exchange proposes to amend Chapter V,
Commission and any person, other than to Market Maker quotations, Section 14 Section 3 to replace ‘‘continuous
those that may be withheld from the related to Lead Market Maker quotations quoting’’ with ‘‘intra-day quoting.’’ The
public in accordance with the and Section 15 related to Directed Exchange proposes to amend proposed
provisions of 5 U.S.C. 552, will be Market Maker quotations. Chapter VII, Section 14(f)(4) to replace
available for website viewing and The text of the proposed rule change ‘‘continuous electronic quote
printing in the Commission’s Public is available on the Exchange’s website at obligation’’ with ‘‘intra-day electronic
Reference Room, 100 F Street NE, http://nasdaqbx.cchwallstreet.com/, at quote obligation.’’ The Exchange
Washington, DC 20549, on official the principal office of the Exchange, and proposes to amend proposed Chapter
business days between the hours of at the Commission’s Public Reference VII, Section 14(g) to replace
10:00 a.m. and 3:00 p.m. Copies of the Room. ‘‘continuous quotes’’ with ‘‘intra-day
filing also will be available for quotes.’’ The Exchange proposes to
inspection and copying at the principal II. Self-Regulatory Organization’s amend Chapter VII, Section 15(iii)(d) to
office of the Exchange. All comments Statement of the Purpose of, and replace ‘‘continuous electronic quote
received will be posted without change. Statutory Basis for, the Proposed Rule obligation’’ with ‘‘intra-day electronic
Persons submitting comments are Change quote obligation.’’ The Exchange
cautioned that we do not redact or edit In its filing with the Commission, the proposes to amend Chapter X, Section
personal identifying information from Exchange included statements 7(c) to replace ‘‘continuous quotes’’ and
daltland on DSKBBV9HB2PROD with NOTICES
comment submissions. You should concerning the purpose of and basis for ‘‘continuous bids and offers’’ with
submit only information that you wish the proposed rule change and discussed ‘‘intra-day quotes’’ and ‘‘intra-day bids
to make available publicly. All any comments it received on the and offers.’’
submissions should refer to File The Exchange proposes to amend
Number SR–CboeBYX–2018–011, and 1117 CFR 200.30–3(a)(12). Chapter VII, Section 6(d)(i) to delete the
should be submitted on or before 1 15 U.S.C. 78s(b)(1).
August 10, 2018. 2 17 CFR 240.19b–4. 3 Phlx Rule 1081(c)(ii).
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first sentence of this paragraph, ‘‘On a meet each market making obligation reviews quoting as a percentage of the
daily basis, a Market Maker must during separately. A Market Maker who is also total number of minutes, the two
regular market hours make markets the Lead Market Maker, pursuant to standards are otherwise equivalent.
consistent with the applicable quoting Chapter VII, Section 14, will be held to Adding ‘‘associated with the same
requirements specified in these rules, on the Lead Market Maker obligations in Options Participant’’ to the first
a continuous basis in options in which options series in which the Lead Market sentence also makes clear that the
the Market Maker is registered.’’ The Maker is assigned and will be held to obligation is at the firm level and that
Exchange believes that a Market Maker’s Market Maker obligations in all other all associated Market Makers will be
obligation to enter bids and offers for options series where assigned. A Market counted in arriving at the calculation for
the options to which it is registered is Maker who receives a Directed Order,6 quoting obligations. The Exchange also
currently noted in proposed Chapter as described in Chapter VII [sic], Section states, ‘‘Notwithstanding the foregoing,
VII, Section 6(d). The Exchange 10, shall be held to the standard of a a Market Maker shall not be required to
proposes to specifically detail a Market Directed Market Maker, as described in make two-sided markets pursuant to
Maker’s quoting obligations in the Chapter VII, Section 15.’’ The Exchange this Chapter VII, Section 6(d)(i)(1) in
proposed rule text and therefore proposes to make clear that a BX any Quarterly Option Series, any
believes that this sentence is not Options Participant who is a Market Adjusted Option Series, and any option
necessary because the following Maker, Lead Market Maker and Directed series with an expiration of nine months
sentences replaces this sentence with Market Maker will have quoting or greater.’’ This exception exists today
the exception of the intra-day aspect as obligations which may need to be for BX and is simply being carried over
described below. separately met depending on the role. into the new text from current Section
The Exchange proposes to add new 6(d)(i)(2). The definition of an adjusted
Chapter VII, Section 6(d)(i)(1)
rule text to Chapter VII, Section 6(d)(i). option series is currently defined at
The first new sentence will provide ‘‘A The Exchange proposes to remove the Section 6(d)(i)(2) as an option series
Market Maker must enter bids and offers following sentence from Chapter VII, wherein one option contract in the
for the options to which it is registered, Section (d)(i)(1), ‘‘To satisfy this series represents the delivery of other
except in an assigned options series requirement, a Market Maker must than 100 shares of underlying stock or
listed intra-day 4 on the Exchange.’’ The quote 60% of the trading day (as a Exchange-Traded Fund Shares. This
Exchange believes this sentence is more percentage of the total number of definition is being relocated to
specific than Section 6(d) because it minutes in such trading day) or such 6(d)(i)(1)(a), similar to Phlx’s structure
accepts [sic] the intra-day quotes. higher percentage as BX may announce and is defined as ‘‘Adjusted Options
Today, a Market Maker is not held to in advance.’’ The Exchange proposes to Series’’ throughout this rule.
quote an intra-day add of a series replace this language with language that
more technically defines the quoting Chapter VII, Section 6(d)(i)(2)
because the options series was not
obligation. The Exchange proposes the The Exchange proposes to add new
available for trading the entire day. The
following rule text: rule text at Chapter VII, Section
Exchange is adding this exception to the
Market Makers, associated with the same
6(d)(i)(2) which provides the method by
rule text to make clear that Market
Options Participant, are collectively required which the Exchange will calculate the
Makers would not be responsible for
to provide two-sided quotations in 60% of BX Market Maker quoting obligations.
quoting an intra-day addition. The The Exchange proposes to state, that the
the cumulative number of seconds, or such
Exchange believes that not counting higher percentage as BX may announce in Exchange will (i) take the total number
intra-day adds of a series that were not advance, for which that Options Participant’s of seconds the Options Participant
available for the entire day of trading is assigned options series are open for trading. disseminates quotes in each assigned
consistent with the Act because the Notwithstanding the foregoing, a Market options series, excluding Quarterly
Market Maker would not have the Maker shall not be required to make two-
Option Series, any Adjusted Option
opportunity to trade that particular sided markets pursuant to this Chapter VII,
Section 6(d)(i)(1) in any Quarterly Option Series, and any option series with an
options series for the entire trading day. expiration of nine months or greater;
Series, any Adjusted Option Series, and any
The Exchange also proposes to note, and (ii) divide that time by the eligible
option series with an expiration of nine
‘‘On a daily basis, a Market Maker must months or greater. total number of seconds each assigned
make markets consistent with the option series is open for trading that
applicable quoting requirements The 60% requirement and the manner
in which it is calculated is not being day. Similar to Phlx Rule 1081(c)(ii)(D),
specified below.’’ The Exchange the Exchange believes that the addition
proposes to note within the new rule amended. The Exchange does not
propose to amend the current quoting of this language will bring greater
text the specific quoting obligations for transparency to the manner in which
each type of Market Maker. obligations, rather the Exchange
proposes to more clearly state the the Exchange calculated the quoting
The Exchange is also adding rule text obligation. The Exchange is not
to explain the interplay between the current quoting obligations utilizing the
same format as Phlx Rule 1081(c)(ii)(A). amending the manner in which the
quoting obligations for BX Market quoting obligation is calculated, rather
Makers who may also qualify as a Lead The Exchange notes the quoting
obligations expressed as the cumulative the Exchange is simply adding to the
Market Maker, pursuant to Chapter VII, current rule the exact manner in which
Section 14 or Directed Market Maker number of seconds rather than 60% of
the trading day. While the current rule the Exchange determines the quoting
pursuant to Chapter VII, Section 15. percentage. The Exchange proposes to
Specifically, the Exchange proposes to indicates that the Exchange currently
add, ‘‘Quoting is not required in every
daltland on DSKBBV9HB2PROD with NOTICES
add, similar to Phlx Rules,5 ‘‘An 6 The term ‘‘Directed Order’’ means an order to assigned options series.’’ This sentence
Options Participant will be required to buy or sell which has been directed, provided it is is not currently contained in the rule.
properly marked as such, to a particular market The Exchange is not proposing to
4 An intra-day add of a series shall be defined, for
maker (‘‘Directed Market Maker’’). Directed Orders amend its current practice, rather the
purposes of this Phlx Rule 1081 [sic], as an option are handled within the System pursuant to Chapter
series that is added manually on the same day the VII [sic], Section 10. Directed Orders may be
Exchange is clearly stating that quoting
series begins trading. available only in certain options. See Chapter VII is not required in every assigned options
5 See Phlx Rule 1081(c). [sic], Section 1(e)(2). series to make clear the current
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![34642 Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices
The Exchange notes the quoting believes that the addition of this text mirrors language currently
obligations expressed as the cumulative language will bring greater transparency contained in Section 14(f)(1).
number of seconds rather than 90% of to the manner in which the Exchange
the trading day. The two standards are calculated the quoting obligation. The Chapter VII, Section 14(f)(2), (3) and (4)
equivalent. The rule text in current Exchange proposes to add, ‘‘Quoting is The Exchange proposes to renumber
Section 14(f)(1) is being revised and not required in every assigned options current Section 14(f)(1)(i) as Section
certain text is being relocated. The legal series.’’ This sentence is not currently 14(f)(4). As noted herein, current
quote width obligations are now in contained in the rule. The Exchange is Section 14(f)(4) is being relocated to
Section 14(f) generally and the not proposing to amend its current within the rule text as explained above.
compliance obligations are being practice, rather the Exchange is clearly
The Exchange also proposes to
relocated to Section 14(f)(3) as described stating that quoting is not required in
in more detail below. The rule text renumber Section 14(f)(2) and (3),
every assigned options series to make
related to making a two-sided market in which are not being amended, as 14(g)
clear the current obligation. Also, the
Quarterly Option Series, any adjusted Exchange proposes to state, and (h), respectively.
option series, and any option series with ‘‘Compliance with this requirement is Chapter VII, Section 15(iii)
an expiration of nine months or greater determined by reviewing the aggregate
is being relocated from Section 14(f)(4) of quoting in assigned options series for The Exchange proposes to amend
along with the definition for an the Options Participant.’’ This language Section 15(iii) related to Directed
Adjusted Option Series which is being is similar to the language currently Market Maker quoting requirements to
relocated to Section 14(f)(1)(a) and is being removed from Chapter VII, similarly add text to conform to Phlx
being defined. The Exchange is also Section 14(f)(1), ‘‘These obligations will Rule 1081(c)(ii)(C). The Exchange
relocating this sentence ‘‘However, a apply to all of the LMMs appointed proposes to add to Section 15(iii), ‘‘A
LMM may still receive a participation issues collectively, rather than on an Directed Market Maker must enter two-
entitlement in such series if it elects to option-by-option basis.’’ The proposed sided quotations. A Directed Market
quote in such series and otherwise new language simply conforms the text Maker that enters a bid (offer) in a series
satisfies the requirements of Chapter VI, to Phlx’s Rule 1081(c)(ii)(D). of an option in which he is registered on
Section 10’’ from current Chapter VII, BX must enter an offer (bid), except in
Section 14(f)(4). The Exchange is Chapter VII, Section 14(f)(3)
an assigned options series listed intra-
conforming the adjusted series The Exchange proposes to relocate the day on BX. These quotations must meet
definition to that of Phlx,8 which following rule text from current Section the legal quote width requirements
provides ‘‘An adjusted option series is 14(f)(1) to new (f)(3) ‘‘BX Regulation specified in Chapter VII, Section
an option series wherein one option may consider exceptions to the 6(d)(ii).’’ Similar to the changes for BX
contract in the series represents the requirement to quote 90% (or higher) of Market Makers and Lead Market
delivery of other than 100 shares of the trading day based on demonstrated Makers, the Exchange proposes to more
underlying stock or Exchange-Traded legal or regulatory requirements or other specifically state within Section 15(iii)
Fund Shares.’’ 9 The amendment of the mitigating circumstances.’’ The that an Directed Market Maker must
definition will not result in an adjusted Exchange proposes to replace this rule enter two-sided quotations. Today, a
option series being treated differently text in current Section 14(f)(1), Directed Market Maker is not held to
for purposes of BX Rules. ‘‘However, determining compliance quote an intra-day add of a series
Chapter VII, Section 14(f)(2) with the continuous quoting because the options series was not
requirement on a monthly basis does available for trading the entire day. The
The Exchange proposes to add new
not relieve an LMM of the obligation to Exchange is adding this exception to the
rule text at Chapter VII, Section 14(f)(2)
provide continuous two-sided quotes on rule text to make clear that Directed
which provides the method by which
a daily basis, nor will it prohibit the Market Makers would not be
the Exchange will calculate the BX
Exchange from taking disciplinary responsible for quoting an intra-day
LMM quoting obligations. The Exchange
action against an LMM for failing to addition. The Exchange believes that
proposes to state, that the Exchange will
meet the continuous quoting obligation not counting intra-day adds of a series
(i) take the total number of seconds the
each trading day’’ with the following that were not available for the entire day
Options Participant disseminates quotes
rule text: of trading is consistent with the Act
in each assigned options series,
excluding Quarterly Option Series, any For purposes of the Exchange’s because the Directed Market Maker
Adjusted Option Series, and any option surveillance of an Options Participant would not have the opportunity to trade
series with an expiration of nine months compliance with this rule, the Exchange may that particular options series for the
determine compliance on a monthly basis. entire trading day. As is the case today,
or greater for Market Makers; and (ii) The Exchange’s monthly compliance
divide that time by the eligible total a Directed Market Maker must meet the
evaluation of the quoting requirement does
number of seconds each assigned option not relieve an Options Participant of the legal quote width requirements
series is open for trading that day. This obligation to provide two-sided quotes on a specified in Chapter VII, Section 6(d)(ii).
language conforms to the language also daily basis, nor will it prohibit the Exchange The Exchange also proposes to add to
proposed for Chapter VII, Section from taking disciplinary action against an this paragraph the following sentence,
6(d)(i)(2). Similar to Phlx, the Exchange Options Participant for failing to meet the
‘‘A Market Maker who receives a
quoting obligation each trading day.
Directed Order, as described in Chapter
daltland on DSKBBV9HB2PROD with NOTICES
8 See Phlx Rule 1081(c)(ii)(A)(i).
9 Chapter The Exchange is not amending the VII [sic], Section 10, shall be held to the
VII, Section 14(f)(4) provides the
following definition for an adjusted options series, manner in which the surveillance standard of a Directed Market Maker as
‘‘For purposes of this Rule, an adjusted option functions today. The Exchange proposes described in Chapter VII, Section 15.’’
series is an option series wherein, as a result of a to conform this rule text throughout the This language will make clear where a
corporate action by the issuer of the underlying
security, one option contract in the series represents
rule to mirror language utilized in Phlx Market Maker receives a Directed Order
the delivery of other than 100 shares of underlying Rule 1081(c)(iii) and also proposed new and what the quoting standard shall be
security.’’ Chapter VII, Section 6(d)(i)(3). This rule for that Directed Market Maker.
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![Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 34643
Chapter VII, Section 15(iii)(a) satisfies the requirements of Chapter VII the issues, rather than on an issue-by-
[sic], Section 10.’’ issue basis.’’ The proposed new
The Exchange proposes to adopt a language simply conforms the text to
new Section 15(iii)(a) and provide, Chapter VII, Section 15(iii)(a)(i)
Phlx’s Rule 1081(c)(ii)(D).
Directed Market Makers, associated with The Exchange proposes to adopt a
the same Options Participant, are definition of an adjusted option series in Chapter VII, Section 15(iii)(c)
collectively required to provide two- subparagraph (i) similar to Phlx 11 The Exchange proposes to relocate the
sided quotations in 90% of the which provides ‘‘An adjusted option following rule text from current Section
cumulative number of seconds, or such series is an option series wherein one 15(iii) to new 15(iii)(c) ‘‘BX Regulation
higher percentage as BX may announce option contract in the series represents may consider exceptions to the
in advance, for which that Options the delivery of other than 100 shares of requirement to quote 90% (or higher) of
Participant’s assigned options series are underlying stock or Exchange-Traded the trading day based on demonstrated
open for trading. An Options Participant Fund Shares,’’ 12 and define it. The legal or regulatory requirements or other
shall be considered directed in all amendment of the definition will not mitigating circumstances.’’ The
assigned options once the Options result in an adjusted option series being Exchange proposes to add,
Participant receives a Directed Order in treated differently for purposes of BX
any option in which they are assigned Rules. For purposes of the Exchange’s
surveillance of an Options Participant
and shall be considered a Directed Chapter VII, Section 15(iii)(b) compliance with this rule, the Exchange may
Market Maker until such time as an
The Exchange proposes to add new determine compliance on a monthly basis.
Options Participant notifies the The Exchange’s monthly compliance
Exchange that they are no longer rule text at Chapter VII, Section
15(iii)(b) which provides the method by evaluation of the quoting requirement does
directed. Notwithstanding the foregoing, not relieve an Options Participant of the
an Options Participant shall not be which the Exchange will calculate the
obligation to provide two-sided quotes on a
required to make two-sided markets in BX Directed Market Maker quoting
daily basis, nor will it prohibit the Exchange
any Quarterly Option Series, any obligations. The Exchange proposes to
from taking disciplinary action against an
Adjusted Option Series, and any option state, that the Exchange will (i) take the Options Participant for failing to meet the
series with an expiration of nine months total number of seconds the Options quoting obligation each trading day.
or greater. Notwithstanding the Participant disseminates quotes in each
obligations specified in subparagraph assigned options series, excluding The Exchange is not amending the
Quarterly Option Series, any Adjusted manner in which the surveillance
(iii) above, a DMM may still receive a
Option Series, and any option series functions today. The Exchange proposes
participation entitlement in such series
with an expiration of nine months or to conform this rule text throughout the
if it elects to quote in such series and
greater; and (ii) divide that time by the rule to mirror language utilized in Phlx
otherwise satisfies the requirements of
eligible total number of seconds each Rule 1081(c)(iii). The Exchange
Chapter VII [sic], Section 10.
assigned option series is open for proposes to relocate and revise this
The Exchange notes that it is not trading that day. Similar to Phlx, the language, ‘‘provide continuous two-
amending the quoting obligations for Exchange believes that the addition of sided quotations throughout the trading
Directed Market Makers. The Exchange this language will bring greater day in all options issues for which the
is simply conforming the text to Phlx transparency to the manner in which Directed Market Maker is assigned for
Rule 1081(c)(ii)(C). The Exchange is the Exchange calculated the quoting 90% of the time the Exchange is open
adding rule text to make clear, similar obligation. for trading in each issue. Such
to Phlx Rule 1081(c)(ii)(C), when a The Exchange proposes to add, quotations must meet the legal quote
Directed Market [sic] is considered to be ‘‘Quoting is not required in every width requirements of Chapter VII,
directed. Similar to Phlx, an Options assigned options series.’’ This sentence Section 6. These obligations will apply
Participant shall be considered directed is not currently contained in the rule. collectively to all series in all of the
in all assigned options once the Options The Exchange is not proposing to issues, rather than on an issue-by-issue
Participant receives a Directed Order in amend its current practice, rather the basis. Compliance with this obligation
any option in which they are assigned Exchange is clearly stating that quoting will be determined on a monthly basis’’
and shall be considered a Directed is not required in every assigned options as described herein into Sections 15(iii)
Market Maker until such time as an series to make clear the current and Section 15(iii)(a).
Options Participant notifies the obligation.
Also, the Exchange proposes to state, Chapter VII, Section 15(iii)(d)
Exchange that they are no longer
directed. The Exchange, similar to ‘‘Compliance with this requirement is The rule text concerning a technical
today, shall not apply quoting determined by reviewing the aggregate failure is being relocated from Section
obligations to Quarterly Option Series, of quoting in assigned options series for 15(iii) to Section 15(iii)(d). The word
any Adjusted Option Series, and any the Options Participant.’’ This language ‘‘system’’ is being capitalized as that
option series with an expiration of nine is similar to the language currently term is defined within the Rulebook. As
months or greater.10 The Exchange is being removed from Chapter VII, noted herein, Section 15(iv) is being
relocating language to Section 15(iii)(a) Section 15(iii) ‘‘These obligations will relocated to Section 15(iii)(a) and
from Section 15(iv) which states, ‘‘a apply collectively to all series in all of Sections 15(iii)(a)(i).
DMM may still receive a participation The Exchange believes this proposed
daltland on DSKBBV9HB2PROD with NOTICES
11 See
Phlx Rule 1081(c)(ii)(A)(i).
entitlement in such series if it elects to 12 Chapter rule will allow Market Makers to
VII, Section 15(iv) provides the
quote in any Quarterly Option Series, following definition for an adjusted options series, quickly compare obligations across
any Adjusted Option Series, and any ‘‘For purposes of this Rule, an adjusted option Nasdaq affiliated markets.13
option series with an expiration of nine series is an option series wherein, as a result of a
months or greater series and otherwise corporate action by the issuer of the underlying
security, one option contract in the series represents 13 The Exchange intends to file a similar proposal
the delivery of other than 100 shares of underlying for The Nasdaq Stock Market, LLC, Nasdaq ISE,
10 See current Chapter VII, Section 15(iv). security.’’ LLC, Nasdaq GEMX, LLC and Nasdaq MRX, LLC.
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![Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Notices 34645
For the Commission, by the Division of Percent declaration for Private Non-Profit
Trading and Markets, pursuant to delegated organizations in the State of NEW
authority.24 Businesses with Credit Avail- JERSEY, dated 06/08/2018, is hereby
Eduardo A. Aleman, able Elsewhere ...................... 7.220 amended to include the following areas
Assistant Secretary. Businesses without Credit as adversely affected by the disaster.
[FR Doc. 2018–15502 Filed 7–19–18; 8:45 am]
Available Elsewhere .............. 3.610
Non-Profit Organizations with Primary Counties: Burlington
BILLING CODE 8011–01–P All other information in the original
Credit Available Elsewhere ... 2.500
Non-Profit Organizations with- declaration remains unchanged.
out Credit Available Else-
(Catalog of Federal Domestic Assistance
SMALL BUSINESS ADMINISTRATION where ..................................... 2.500
Number 59008)
For Economic Injury:
[Disaster Declaration #15584 and #15585; Businesses & Small Agricultural James Rivera,
Texas Disaster Number TX–00500] Cooperatives without Credit Associate Administrator for Disaster
Available Elsewhere .............. 3.610 Assistance.
Presidential Declaration of a Major Non-Profit Organizations with-
Disaster for the State of Texas out Credit Available Else- [FR Doc. 2018–15588 Filed 7–19–18; 8:45 am]
where ..................................... 2.500 BILLING CODE 8025–01–P
AGENCY: U.S. Small Business
Administration.
The number assigned to this disaster
ACTION: Notice. for physical damage is 155846 and for SMALL BUSINESS ADMINISTRATION
SUMMARY: This is a Notice of the economic injury is 155850.
Presidential declaration of a major (Catalog of Federal Domestic Assistance [Disaster Declaration #15590 and #15591;
Number 59008) WEST VIRGINIA Disaster Number WV–
disaster for the State of Texas (FEMA–
00049]
4377–DR), dated 07/06/2018.
Incident: Severe Storms and Flooding. James Rivera,
Presidential Declaration of a Major
Incident Period: 06/19/2018 and Associate Administrator for Disaster Disaster for Public Assistance Only for
continuing. Assistance.
the State of West Virginia
DATES: Issued on 07/06/2018. [FR Doc. 2018–15587 Filed 7–19–18; 8:45 am]
Physical Loan Application Deadline BILLING CODE 8025–01–P AGENCY: U.S. Small Business
Date: 09/04/2018. Administration.
Economic Injury (EIDL) Loan ACTION: Notice.
Application Deadline Date: 04/08/2019. SMALL BUSINESS ADMINISTRATION
ADDRESSES: Submit completed loan SUMMARY: This is a Notice of the
[Disaster Declaration #15553 and #15554;
applications to: U.S. Small Business NEW JERSEY Disaster Number NJ–00048] Presidential declaration of a major
Administration, Processing and disaster for Public Assistance Only for
Disbursement Center, 14925 Kingsport Presidential Declaration Amendment of the State of West Virginia (FEMA–4378–
Road, Fort Worth, TX 76155. a Major Disaster for Public Assistance DR), dated 07/12/2018.
Only for the State of New Jersey Incident: Severe Storms, Flooding,
FOR FURTHER INFORMATION CONTACT: A.
Landslides, and Mudslides.
Escobar, Office of Disaster Assistance, AGENCY: U.S. Small Business Incident Period: 05/28/2018 through
U.S. Small Business Administration, Administration. 06/03/2018.
409 3rd Street SW, Suite 6050, ACTION: Amendment 1.
Washington, DC 20416, (202) 205–6734. DATES: Issued on 07/12/2018.
SUPPLEMENTARY INFORMATION: Notice is SUMMARY: This is an amendment of the Physical Loan Application Deadline
hereby given that as a result of the Presidential declaration of a major Date: 09/10/2018.
President’s major disaster declaration on disaster for Public Assistance Only for Economic Injury (EIDL) Loan
07/06/2018, applications for disaster the State of New Jersey (FEMA–4368– Application Deadline Date: 04/12/2019.
loans may be filed at the address listed DR), dated 06/08/2018. ADDRESSES: Submit completed loan
above or other locally announced Incident: Severe Winter Storm and applications to: U.S. Small Business
locations. Snowstorm. Administration, Processing and
The following areas have been Incident Period: 03/06/2018 through Disbursement Center, 14925 Kingsport
determined to be adversely affected by 03/07/2018. Road, Fort Worth, TX 76155.
the disaster: DATES: Issued on 07/13/2018. FOR FURTHER INFORMATION CONTACT: A.
Primary Counties (Physical Damage and Physical Loan Application Deadline Escobar, Office of Disaster Assistance,
Economic Injury Loans): Cameron, Date: 08/07/2018. U.S. Small Business Administration,
Hidalgo Economic Injury (EIDL) Loan 409 3rd Street SW, Suite 6050,
Contiguous Counties (Economic Injury Application Deadline Date: 03/08/2019. Washington, DC 20416, (202) 205–6734.
Loans Only): ADDRESSES: Submit completed loan SUPPLEMENTARY INFORMATION: Notice is
Texas: Brooks, Kenedy, Starr, Willacy. applications to: U.S. Small Business hereby given that as a result of the
The Interest Rates are: Administration, Processing and President’s major disaster declaration on
Disbursement Center, 14925 Kingsport 07/12/2018, Private Non-Profit
Percent Road, Fort Worth, TX 76155. organizations that provide essential
daltland on DSKBBV9HB2PROD with NOTICES
FOR FURTHER INFORMATION CONTACT: A. services of a governmental nature may
For Physical Damage:
Escobar, Office of Disaster Assistance, file disaster loan applications at the
Homeowners with Credit Avail-
able Elsewhere ...................... 3.875 U.S. Small Business Administration, address listed above or other locally
Homeowners without Credit 409 3rd Street SW, Suite 6050, announced locations.
Available Elsewhere .............. 1.938 Washington, DC 20416, (202) 205–6734. The following areas have been
SUPPLEMENTARY INFORMATION: The notice determined to be adversely affected by
24 17 CFR 200.30–3(a)(12). of the President’s major disaster the disaster:
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Document Created: 2018-07-20 01:19:35
Document Modified: 2018-07-20 01:19:35
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 83 FR 34639 |
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